05 March 2019

Chairperson: Mr J Mthethwa (ANC, KwaZulu-Natal) (Acting)

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Meeting Summary

The Committee was briefed by COGTA KZN on the termination of interventions at Emadlangeni and Dr Nkosazana Dlamini Zuma municipalities and the institution of interventions under Section 139(1)(b) of the Constitution at Endumeni and Abaqulusi municipalities

COGTA KZN said the interventions at Emadlangeni and Dr Nkosazana Dlamini Zuma Mmunicipalities’ had been terminated because the Municipalities were back in business and performing satisfactorily. It said

Emadlangeni ward committee and governance structures were functioning and there had been no public protests in the past 12 months. The Municipality was now stable politically and administratively.

At Dr Nkosazana Dlamini Zuma Mmunicipality there had been improvement in the operation of the municipality and ward committees were functional. Traditional leaders were now participating in the affairs of the municipality. The challenge here had been that the Municipality had failed to appoint a municipal manager for two years, so the intervention was specifically to appoint a municipal manager and senior managers. This had been achieved and there had been a handover to the municipal manager and council.

Members said the MEC had made reference to councillors being absent from meetings and this pointed to governance issues. Members asked for confirmation that corporate governance issues were in place and functioning; what timeframes were in place for the councillors to completely take over the running of the municipality; and was it true that some councillors were abusing their travel allowances?

COGTA KZN said Endumeni Municipality had been a candidate for intervention for a long time. It was a hung municipality and hung municipalities generally struggled to survive. The council was dysfunctional and there had been marches and complaints against the municipality. COGTA KZN had attempted to get the administration to do forensic investigations into financial irregularities, so it had instituted court proceedings to force the municipality to comply and do consequence management. Meetings were like a circus because of the hung municipality and there was conflict between the Mayor, the Speaker and the Municipal Manager. The municipality was taken to court by civic associations because of a lack of service delivery and this was reflected in the collapse and non-functioning of the municipality. The intervention was because the municipality was failing to discharge its responsibilities.

Abaqulusi municipality was also a hung municipality which had created various governance challenges. The PEC had intervened because the council’s meetings never had a quorum. The council administration had taken decisions to terminate contracts which had led to eight litigation cases which could have serious financial consequences for the council. One case had cost the council more than R38 million. The municipality’s finances were in a bad shape and COGTA KZN had tried to assist the municipality, but they did not take the advice given to them. The AG had given them a qualified audit opinion and had told them the municipality was making huge losses in providing water services which it was not authorised to do. Having done what it could to support the municipality the PEC took a decision to intervene to bring the situation to normalcy by appointing an administrator to implement the terms of reference given to him.

Members said what was happening in this municipality was nothing compared to Umzinduzi municipality. The 4th Parliament’s Legacy Report had warned that Section 139 interventions could be used to settle political scores instead of administrative intervention. Why was the MEC not acting there at Umzinduzi? Members said there was more political in-fighting at Umzinduzi than anywhere else. Members urged that there should not be selective interventions as they got the feeling that local government was not well-equipped regarding consequence management. There should be consequences when the code of conduct was contravened. Members said the MFMA also had consequences if it was contravened. Members were very concerned that municipalities were collapsing elsewhere also. Members said that this was the second time the municipality was a hung municipality and asked how much the other litigations would cost. Members asked further why Section 139(1)(b) was invoked and if something else could be developed as the term of Parliament was coming to an end. Members emphasised that the matter was a case of politics, not of administration of the municipalities, and said that sadly nothing would come of the COGTA KZN recommendations if the politics was not sorted out first. Members said that the MEC should not be scared to mention it if EFF Councillors were involved, they should be reassured that the EFF could take steps against any guilty councillor.

Meeting report

Ms Nomusa Dube-Ncube, MEC Cooperative Governance and Traditional Affairs (COGTA) KZN (KwaZulu Natal), said that the interventions in the two municipalities had been terminated because the municipalities were back in business and performing satisfactorily.

Mr Scelo Duma, Acting Chief Director: Municipal Governance and Administration, said the presentation was categorised according to the Back to Basics pillars. The Emadlangeni Ward Committee and Governance structures were functioning and there had been no public protests in the past 12 months and there was spending on capital grants which had been a challenge in the past. COGTA KZN had assisted them to secure funding from the mines in the area. The audit outcome for 2017/18 is anticipated to be a clean audit. The municipality had a debt collection rate of around 80 percent. Councillors had undergone training and workshops on their roles and responsibilities. COGTA KZN was supporting the municipality in an ongoing case with surrounding farmers on the installation of electricity and there would in all likelihood be an out of court settlement in that matter. The municipality was stable politically and administratively.

Dr Nkosazana Dlamini Zuma Municipalities
Mr Duma said the intervention was terminated as there had been improvement in the operation of the municipality and ward committees were functional. Traditional leaders were now participating in the affairs of the municipality. The municipality was engaging with farm dwellers and farm owners on electricity supply. The municipality was doing well on the MIG (Municipal Infrastructure Grant) and the INEP (Integrated Electrification National Programme) capital grant expenditure but there were challenges regarding the human settlement projects. The oversight structures were operational and workshops for the councillors were conducted on their roles and responsibilities. The municipality was a good candidate for a clean audit. They had a 76% debt collection rate.

Ms Dube-Ncube said there was one issue that had made the municipality a challenge. The municipality had failed to appoint a municipal manager for two years, so the intervention was specifically to appoint a municipal manager and senior managers. This had been achieved and there had been a handover to the municipal manager and council.

Discussion

Mr S Mthimunye (ANC, Mpumalanga) said the MEC had made reference to councillors being absent from meetings and avoiding the MEC. This pointed to governance issues and he asked for confirmation that corporate governance issues were in place and functioning, because if the political branch of a municipality was malfunctioning, then this was akin to a collapse of the municipality.

Dr H Mateme (ANC, Limpopo) asked what timeframes were in place for the councillors to completely take over the running of the municipality. Was it true that some councillors were abusing their travel allowances?

Ms Dube-Ncube said that municipalities were now fulfilling their obligations. Councillors had undergone re-training and the issue of addressing bloated municipal structures was being addressed as part of provincial support to municipalities. If municipalities were unwilling to fulfil their obligations on their own, there would be interventions by the province. She had received a briefing from traditional leaders on how municipalities were badly run. Governance issues were being addressed and COGTA KZN was monitoring breaches of the code of conduct by councillors, and the oversight of councillors had improved as there had been instances where councillors’ behaviour was embarrassing. She said interventions were a last resort but COGTA KZN was happy that they could end the intervention under Section154 and would continue to support the municipalities.

The Chairperson thanked her for the progress made by the municipalities.

Endumeni Municipality

Ms Dube-Ncube said the municipality had been a candidate for an intervention for a long time. It was one of the hung municipalities and hung municipalities generally struggled to survive. It had been the second last municipality to convene in 2006 because of the challenges it had faced. The council was dysfunctional and there had been marches and complaints against the municipality. COGTA KZN had investigated some of the allegations and had tabled a report with recommendations in October 2018. A new mayor and speaker had been put in place to ensure that the recommendations would be implemented, but there had been no appetite by the administration to do forensic investigations into financial irregularities. Because there was no appetite to investigate irregularities through forensic investigations, she instituted court proceedings to force the municipality to comply and do consequence management. Following the report on the municipality, the mayor resigned and was arrested, and the speaker was expelled. It became clear that the municipality could not operate, and its compliance issues were not dealt with. The IEC assisted in filling the vacancies at the municipality. It took two years to appoint a deputy mayor at the same municipality. Meetings were like a circus because of the hung municipality. A mayor was eventually elected but the municipal manager defied the elected mayor. Council was not happy with the behaviour of the municipal manager and wanted to suspend him. Later the municipal manager was suspended. There was no CFO (Chief Financial Officer) at that time nor were there other senior officials to take over the municipality. The municipality was taken to court by civic associations because of a lack of service delivery and this was reflected in the collapse and non- functioning of the municipality. The mayor and speaker were arrested for allegedly plotting to murder a councillor that had been killed. COGTA KZN had intervened only as a last resort and brought in someone from outside whose terms of reference was to implement a recovery plan. The mayor was out on bail and the speaker was expelled from his party and a new mayor and speaker were elected. The council was still battling as they still did not see eye to eye, hence the intervention under section 139(1) (b) of the Constitution because the municipality was failing to discharge its responsibilities.

Mr Duma said that after the intervention, the President had proclaimed a SIU (Special Investigation Unit) investigation at Endumeni municipality and now the new mayor was also expelled by his own party and there would be a by election scheduled for the following day.

Abaqulusi Municipality

Mr Duma said this was a new intervention based on a decision taken by the PEC (Provincial Executive Committee) a week ago. It was also a hung municipality which was beset with various governance challenges. The PEC had intervened because the Council’s meetings never had a quorum. Against the advice of the PEC, the meetings went ahead with Council rejecting the PEC’s advice and saying they would do things their own way. This put the functionality of the council in question. He said the new council administration had taken decisions to terminate contracts which had led to eight litigation cases which could have serious financial consequences for the Council. One case had cost the council more than R38m.

Ms Dube-Ncube said the latter case had been going on for 15 years. The municipality had sold land to a company to build low cost housing. The land had been bought for R800 000 but the cost to settle the case was R38m. The municipality claimed it had followed legal advice but Ms Dube-Ncube had told them ultimate responsibility rested with the council and not the lawyers.

Mr Duma said the municipality had not complied with the requirements set by the national minister when providing security to the political leadership. There were allegations that security was provided on a partisan basis. They appointed senior managers and in one instance the speaker was known to be related to the director of corporate services but did not recuse himself from the meeting taking the decision on who to appoint in that position. He was ultimately appointed at a meeting where the speaker was the chairperson of the meeting. The speaker still saw nothing wrong in his responses to COGTA KZN. In another instance the municipal manager had not disclosed that he was being investigated at his previous municipality. The council ignored this and appointed him. The Council had also appointed someone who had claimed he had a master’s degree but who did not even have matric. This person eventually resigned. COGTA KZN had enquired whether they could open a case as the municipality had not done so, but was advised that COGTA KZN had no locus standi to bring a case. The municipality’s finances were in a bad shape and COGTA KZN had tried to assist the municipality, but they did not take the advice given to them. The AG had given them a qualified audit opinion and had told them the municipality was making huge losses in providing water services which it was not authorised to do. He said the Provincial Treasury had assessed the budget and found there were contradictions in the councils’ budget. COGTA KZN had asked them to cut their costs to remain sustainable as they were spending more money than what they had. By the end of December 2018, they had a R5 million deficit in terms of the grants given to them because they were using the grants for operational expenditure which is not allowed. Their liquidity was supposed to be between one to three months but in their case it was below that. It had a huge debtor’s book. It had owed Eskom and after COGTA KZN had discussions with Eskom; an agreement was signed to stave off being shut down by Eskom. In the last report COGTA KZN had received in January, the municipality had defaulted on the agreement. He highlighted that this municipality was one of the municipalities that received a letter from COGTA National that they would be recommending National Treasury to stop providing MIG funding to the municipality. Having done what it could to support the municipality the PEC took a decision to intervene to bring the situation to normalcy by appointing an administrator to implement the terms of reference given to him.

Ms Dube-Ncube said it was a case where one hoped sanity would prevail, but council just continued to do their own thing. In some cases, provincial officials were not allowed to assist the municipality.

Discussion

Mr M Chetty (DA, KZN) said what was happening in this municipality was nothing compared to Umzinduzi Municipality. Umzinduzi was an ANC controlled municipality and Endumeni and Abaqulusi were opposition-controlled municipalities. He said the 4th Parliament’s legacy report had warned that Section 139 interventions could be used to settle political scores instead of administrative intervention. The President also instituted a SIU investigation in Umzinduzi municipalities. Currently fire services, water and sanitation and refuse collection were all on strike there. There was no report on this. Why was the MEC not acting there and why was there no report? He noted the MEC’s comments on the four to five attempts to establish a council which had all failed. Was this because of a deliberate absence of 21 ANC councillors and was any action taken against these absent councillors? He said there was more political in-fighting here than anywhere else. He added that an opposition member was caught for bribery and that there should not be selective interventions.

Dr Mateme said that she was surprised that Mr Chetty was speaking about councils not being able to quorate because of the absence of members of the council, when the Select Committee itself had suffered the same fate at the hand of the DA Members’ absence a week ago.

Mr Chetty said he had tendered an apology for his absence because he had a second meeting he had to attend.

Dr Mateme said she got the feeling that local government was not well-equipped regarding consequence management. There should be consequences when the code of conduct was contravened. She said the MFMA (Municipal Finance Management Act) also had consequences if it was contravened. All the contraventions boggled her mind.

Ms T Mokwele (EFF, North West) said municipalities were collapsing. In her regions there were 26 municipalities of which 12 were not functional. She said there was a problem within the sphere of local government and mechanisms and systems needed to be put in place. She said that this was the second time the municipality was a hung municipality. She wanted to know how much the other litigations would cost. She asked why Section 139(1)(b) was invoked. Could something else not be developed as the term of Parliament was coming to an end? She said the matter was a case of politics, not of administration of the municipalities. She said nothing would come of the recommendations if the politics was not sorted out first. She said the MEC should not be scared to mention if EFF councillors were involved so that the EFF could take steps against any guilty councillor.

Ms Dube-Ncube said it should be known that in Umzinduzi action was taken under Section 154 of the Constitution. She had written to the National Minister to assist there and had called on the National Treasury also. Lots of teams were working in those municipalities, the National Minister, the provincial MEC, COGTA KZN and COGTA National, the Hawks and the SIU assisted there as well.

She said COGTA KZN always looked beyond the political parties because the municipalities should not be subject to the unacceptable behaviour of councillors and administrators.. There was an instance of an administrator with the wrong qualifications claiming a master’s degree but having no matric who had resigned. She wanted this matter to be followed up to get the person to repay monies paid to them.

She said COGTA KZN was working with Eskom to not switch off electricity to municipalities, but after signing an agreement, the municipality then defaulted on payments. She agreed that consequence management was key, as nothing happened when councils received adverse audit opinions.

She said the challenge was politicians not wanting to implement consequence management. The administration needed to be cleaned up.

She said she did not have all the information for all the litigation cases of municipalities. The administrator would be able to dig for this information as he assessed the extent of the damage done.

She said the Committee should not be surprised to see her back in front of them as COGTA KZN was now doing more investigations on municipalities that were candidates for interventions.

Mr Chetty said it needed to be made clear that interventions should be based on the administrative side of things and not the political part.

The Chairperson noted that the first two cases presented were related to ANC controlled municipalities and the latter two on non-ANC controlled municipalities.